As of the end of March this year, US Treasury bond holdings at 35%... reduced by 12 percentage points in one year
[Asia Economy Reporter Park Byung-hee] According to Bloomberg News on the 2nd (local time), the world's largest pension fund, the Japan Government Pension Investment Fund (GPIF), reduced its holdings of U.S. Treasury bonds to the lowest level ever during the 2020 fiscal year (April 2020 to March 2021). GPIF implemented a new five-year asset allocation policy starting in the 2020 fiscal year, and it was confirmed that the proportion of U.S. Treasury bonds was significantly reduced in the first year.
According to Bloomberg's analysis, as of the end of the last fiscal year in March this year, the share of U.S. Treasury bonds in GPIF's bond holdings was 35%. This is a 12 percentage point decrease from 47% at the end of the 2019 fiscal year.
Bloomberg's analysis shows that GPIF's share of U.S. Treasury bonds was around 30% in the 2017 fiscal year. GPIF significantly increased its U.S. Treasury bond holdings over the next two fiscal years but reduced the share to the largest scale ever in the 2020 fiscal year. Bloomberg analyzed that the reason for the increase in U.S. Treasury bond holdings just before the 2020 fiscal year may be due to investing in safe short-term U.S. Treasury bonds for a short period ahead of the new asset allocation plan in the 2020 fiscal year.
Instead of holding U.S. Treasury bonds, GPIF increased its holdings of European government bonds. In particular, the shares of French, Italian, German, and British government bonds increased by at least 1.7 percentage points.
Under the five-year asset allocation policy that began last April, GPIF decided to reduce its holdings of Japanese government bonds and increase the proportion of stocks and overseas bonds, which are expected to yield higher returns. Bloomberg analyzed that due to this change in asset allocation policy, the share of U.S. Treasury bonds decreased while the share of European government bonds increased.
According to the new asset allocation policy, GPIF plans to equally divide its investments between bonds and stocks and also balance its investments equally between domestic and overseas markets. Previously, GPIF invested 35% of its total assets in Japanese government bonds.
GPIF does not publicly comment on changes in its assets. However, since its investment scale reaches 17 trillion yen, changes in GPIF's investment assets have a significant impact on the market.
Ayako Sera, an investment strategist at Mitsui Sumitomo Trust Bank, said, "GPIF greatly influences the investment decisions of other Japanese pension funds," adding, "Because GPIF affects the market."
According to actual U.S. Treasury Department data, Japanese investors net sold $24 billion worth of U.S. Treasury bonds from April, the start of the 2021 fiscal year. Japanese investors net sold $35 billion worth of U.S. Treasury bonds in the 2020 fiscal year, the largest amount in three years.
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